How Dongguan is climbing the ladder of China’s most competitive cities

July 15, 2019

A cluster of 400 robotics and smart manufacturing companies is taking shape in Dongguan’s Songshan Lake science and technology park, the beating heart of the city’s tech sector. That’s helped Dongguan take a higher spot in a new ranking from an influential think-tank too.

Dongguan’s new profile shone through in rankings published last month by the Chinese Academy of Social Sciences (CASS), which rated nearly 300 cities in terms of livability, sustainability and enterprise competitiveness.

Hong Kong, Shanghai and Shenzhen took top honours, but Dongguan joined Guangzhou, Beijing, Suzhou, Nanjing and Wuhan in the the lead group.

Classifying it as a ‘Greater China’ city, CASS put Taipei in the top ten as well.

Dongguan launched the park in Songshan five years ago and it helped total investment in the city surge more than a third last year, second only to Guangzhou in the Greater Bay Area in growth terms.

Output from firms in advanced manufacturing and high-tech manufacturing grew substantially in the first quarter this year as well, although the sector growing fastest was “information device manufacturing” – or smartphones, notepads, laptops and other IoT devices.

In the past Dongguan’s economy depended more on cheap labour arriving from other towns and rural areas. Lower-end manufacturing thrived until the onset of the global financial crisis in 2008, which dealt the city a crushing blow, setting off a wave of factory closures.

There was no choice but to change – and thus the local government upped its commitment to industrial upgrade.

Dongguan has developed in lockstep with nearby Shenzhen, where costs have advanced even faster in wages and land. Many firms still house their R&D units there, but they are moving more of their production to Dongguan, less than an hour’s drive away.

Companies are also starting to invest in more know-how in Dongguan. Last week smartphone maker Oppo started construction of a new R&D centre there (at an expected cost of at least Rmb2.2 billion), and Huawei has moved some of its own R&D resources to the vast “Ox Horn” campus it has built at Songshan, which has room to accommodate 25,000 employees.

As the Brief mentioned in May, Dongguan is hopeful of hosting the first ‘GBA University’ campus in the near future too.

In the meantime, the local government is looking for ways to promote more support from the capital markets. Months before the launch of Shanghai’s STAR Market, a Nasdaq-style tech board, Dongguan officials started prepping local startups for fundraising on the new platform, hoping that its higher-end manufacturers could tap it for finance.

In a recent China 500 rich list published by New Fortune magazine, six billionaires were identified as coming from Dongguan. The majority made their money in sectors like apparel, paper and property, but probably the best known of the bunch is Duan Yongping of BBK Group, an electronics giant. Initially a manufacturer of devices for other companies, BBK has since launched major smartphone brands of its own such as Oppo and Vivo. That transition from OEM and assembler to brand owner epitomises the journey that Dongguan wants to take at city level. If it continues to transform itself in the way that it hopes, more people like Duan will be joining the rich list in the years ahead.

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